The Finance Division has announced new penalties on voluntary retirement for federal government employees, following recommendations from the Pay and Pension Commission 2020. The notification outlines a structured penalty system aimed at employees opting for early retirement.

According to the notification, federal employees who choose to retire after completing 25 years of service will face a flat reduction rate of 3 percent per year in their gross pension. This reduction is calculated based on the number of completed months from the date of retirement to the official date of superannuation. The total reduction in gross pension will be capped at 20 percent.

For members of the Armed Forces and Civil Armed Forces, these penalties will only apply if voluntary retirement is sought or granted before reaching the prescribed Rank of Service.

The Finance Division has stated that existing instructions regarding voluntary retirement will be amended to reflect these changes, which take effect immediately. This move is part of a broader effort to align retirement policies with the recommendations of the Pay and Pension Commission, ensuring a more sustainable pension system for federal employees.